Commercial real estate investment to reach W17tr

The entire volume of commercial real estate investments in the South Korean market is forecast to reach 17 trillion won ($15.3 billion), similar to last year’s level, analysts predicted.

“Foreign investors are paying keen attention to the local market due to the country’s relatively successful containment of the pandemic, and Seoul was named in the top three most attractive markets, according to CBRE’s 2021 Asia Pacific Investor Intentions Survey,” said Don Lim, managing director of CBRE Korea.

“We predict that investors will be active in the market this year based on abundant liquidity and low interest rates,” the manager added.

Some large office buildings and logistics facilities, including SK Seorin Building, Pine Avenue Tower B and Samsung Fire Yeoksam Building, are expected to change hands this year.

The property services company forecast that logistics centers will likely see a significant increase in transaction activity this year. Some planned major logistics deals include investment firm Mirae Asset’s logistics assets -- Incheon Dohwa Logistics Center, Gimpo Logisfield and Dongwon Giheung Logistics.

CBRE anticipated that demand for logistics hubs and warehouses will likely increase thanks to the growth of e-commerce platforms and third-party logistics services, which take up three-quarters of Grade A logistics space in the Greater Seoul area.

Commercial property is often classified into three categories -- Class A, B, and C -- and Grade A is given to those with excellent conditions.

Due to the prolonged coronavirus pandemic, local companies, especially insurance companies, will try to improve their financial structure, and consider sale leaseback deals, which offer investors opportunities to acquire stabilized office assets, CBRE said.

In the hotel sector, transactions are expected to begin to recover and some domestic developers will consider converting hotels into offices and residential buildings, depending on their locational appeal and development potential.

By Kim Young-won (wone0102@heraldcorp.com)